Bad Economy Reaches Cupertino, Says Analyst

Posted by: Peter Burrows on September 25

Long-time computer analyst Keith Bachman at BMO Capital Markets has a report out this morning suggesting that the shaky economy could cost Apple 150,000 Mac sales this quarter and $600 million in revenue. He’s lowering his target price for the stock, now at $130, from $190 to $180. It’s another informed opinion on the cloudy outlook Arik wrote about recently.

Can’t say I’m surprised. Given tight Reg FD restrictions, companies can’t really speak the obvious—that a bad economy hurts sales—until it’s become a fact. What’s interesting to watch is how Apple fares versus its rivals, relative to market share. The company has said it plans to bring down its margins, both to be more competitive in its traditionally higher-end products and to be more aggressive about hitting lower price points. If Apple executes this strategy well, it could get hurt less than rivals. If not, it could lose some momentum in picking up as new arrivals to the Mac platform, since people who absolutely have to buy a new computer may stick with a PC just becuase it has a lower sticker price. Interestingly, Bachman increased his gross margin projections for the quarter, based on lower-than-expected component prices. But if gross margins rise in the crucial December quarter, my hunch is that we could see Apple’s PC market share gains slow or nearly stall.

Either way, Apple shares probably have more upside than downside risk at the moment—barring that Great Depression scenario, of course. Bachman doubts the shares will fall below $120. Here’s a more bullish view from the investor perspective, from Henry Blodgett at Yahoo Tech Ticker.

So what about you? Are you in the market for a Mac? Are you going ahead with the purchase, or putting it off until we know how this economic crisis plays out?

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